Should I buy a house or keep renting in 2024?
I'm 28, I make $75K/year, I have $30K saved, and I'm currently paying $1,400/month in rent. Houses in my area are $350K-$400K. Interest rates are around 7%. I'm tired of \"throwing money away\" on rent but I'm scared of being house poor. What should I do?
1 Answer(s)
This is the most common financial dilemma for millennials. Let's do the math and the logic:
Renting analysis: At $1,400/month you're paying $16,800/year. Over 5 years that's $84,000 with zero equity. But you also have zero maintenance, zero property tax, and total flexibility.
Buying analysis: On a $375K house at 7% with 10% down ($37,500), your monthly payment (P+I+T+I) would be roughly $2,800/month. That's DOUBLE your rent. Plus you need 3-6 months of emergency fund on top of your down payment.
The real question: Can you comfortably afford $2,800/month? If yes, buying still makes sense long-term because you're building equity and hedging against rent increases. If no, you'll be house poor and miserable.
My recommendation: With $30K saved, you're close but not quite there. Save another $10-15K for emergency fund + closing costs, then buy. Don't stretch yourself to \"beat rent.\" At 7% rates, the math barely works unless you plan to stay 7+ years.